2.	Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

Our fiscal year ends on the last Saturday in

November,

which periodically results in a

-week year. Fiscal

2018,

2017

and

2016

each contained

weeks. The Consolidated Financial Statements include the accounts of Bassett Furniture Industries, Incorporated and our majority-owned subsidiaries in which we have a controlling interest. All significant intercompany balances and transactions are eliminated in consolidation. Accordingly, the results of Lane Venture have been consolidated with our results since the date of the acquisition. Sales of logistical services from Zenith to our wholesale and retail segments have been eliminated, and Zenith’s operating costs and expenses since the date of acquisition are included in selling, general and administrative expenses in our consolidated statements of net income. The financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Unless otherwise indicated, references in the Consolidated Financial Statements to fiscal

2018,

2017

and

2016

are to Bassett's fiscal year ended

November 24, 2018,

November 25, 2017

and

November 26, 2016,

respectively. References to the “ASC” included hereinafter refer to the Accounting Standards Codification established by the Financial Accounting Standards Board as the source of authoritative GAAP.

We analyzed our licensees under the requirements for variable interest entities (“VIEs”). All of these licensees operate as BHF stores and are furniture retailers. We sell furniture to these licensees, and in some cases have extended credit beyond normal terms, made lease guarantees, guaranteed loans, or loaned directly to the licensees. We have recorded reserves for potential exposures related to these licensees. See Note

for disclosure of leases and lease guarantees. Based on financial projections and best available information, all licensees have sufficient equity to carry out their principal operating activities without subordinated financial support. Furthermore, we believe that the power to direct the activities that most significantly impact the licensees’ operating performance continues to lie with the ownership of the licensee dealers. Our rights to assume control over or otherwise influence the licensees’ significant activities only exist pursuant to our license and security agreements and are in the nature of protective rights as contemplated under ASC Topic

810.

We completed our assessment for other potential VIEs, and concluded that there were

none.

We will continue to reassess the status of potential VIEs including when facts and circumstances surrounding each potential VIE change.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates include allowances for doubtful accounts, calculation of inventory reserves, valuation of income tax reserves, lease guarantees, insurance reserves and assumptions related to our post-employment benefit obligations. Actual results could differ from those estimates.

Revenue Recognition

Revenue is recognized when the risks and rewards of ownership and title to the product have transferred to the buyer. This occurs upon the shipment of goods to independent dealers or, in the case of Company-owned retail stores, upon delivery to the customer. We offer terms varying from

days for wholesale customers. For retail sales, we typically collect a significant portion of the purchase price as a customer deposit upon order, with the balance typically collected upon delivery. These deposits are carried on our balance sheet as a current liability until delivery is fulfilled. Estimates for returns and allowances have been recorded as a reduction to revenue. The contracts with our licensee store owners do

not

provide for any royalty or license fee to be paid to us. Revenue is reported net of any taxes collected. For our logistical services segment, line-haul freight revenue and home delivery revenue are recognized upon the completion of delivery to the destination. Warehousing services revenue is based upon warehouse space occupied by a customer’s goods and inventory movements in and out of a warehouse and is recognized as such services are provided.

Staff Accounting Bulletin

No.

104,

Revenue Recognition

(“SAB

104”

) outlines the

four

basic criteria for recognizing revenue as follows: (

) persuasive evidence of an arrangement exists, (

) delivery has occurred or services have been rendered, (

) the seller’s price to the buyer is fixed or determinable, and (

) collectability is reasonably assured. SAB

104

further asserts that if collectability of all or a portion of the revenue is

not

reasonably assured, revenue recognition should be deferred until payment is received. During fiscal

2018,

2017

and

2016,

there were

sales for which these criteria were

not

met.

Cash Equivalents and Short-Term Investments

The Company considers cash on hand, demand deposits in banks and all highly liquid investments with an original maturity of

three

months or less to be cash and cash equivalents. Our short-term investments consist of certificates of deposit that have original maturities of

twelve

months or less but greater than

three

months.

Accounts Receivable

Substantially all of our trade accounts receivable is due from customers located within the United States. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. The allowance for doubtful accounts is based on a review of specifically identified accounts in addition to an overall aging analysis. Judgments are made with respect to the collectibility of accounts receivable based on historical experience and current economic trends. Actual losses could differ from those estimates.

Concentrations of Credit Risk and Major Customers

Financial instruments that subject us to credit risk consist primarily of investments, accounts and notes receivable and financial guarantees. Investments are managed within established guidelines to mitigate risks. Accounts and notes receivable and financial guarantees subject us to credit risk partially due to the concentration of amounts due from and guaranteed on behalf of independent licensee customers. At

November 24, 2018

and

November 25, 2017,

our aggregate exposure from receivables and guarantees related to customers consisted of the following:

	2018		2017
Accounts receivable, net of allowances (Note 5)	$	19,055	$	19,640
Contingent obligations under lease and loan guarantees, less amounts recognized (Note 16)		1,995		2,717
Total credit risk exposure related to customers	$	21,050	$	22,357

November 24, 2018

and

November 25, 2017,

approximately

33%

and

29%,

respectively, of the aggregate risk exposure, net of reserves, shown above was attributable to

five

customers. In fiscal

2018,

2017

and

2016,

customer accounted for more than

10%

of total consolidated net sales. However,

two

customers accounted for approximately

40%,

47%

and

46%

of our consolidated revenue from logistical services during

2018,

2017

and

2016,

respectively.

We have

foreign manufacturing or retail operations. We define export sales as sales to any country or territory other than the United States or its territories or possessions. Our export sales were approximately

$1,587,

$2,288,

and

$3,607

in fiscal

2018,

2017,

and

2016,

respectively. All of our export sales are invoiced and settled in U.S. dollars.

Inventories

Inventories (retail merchandise, finished goods, work in process and raw materials) are stated at the lower of cost or market. Cost is determined for domestic manufactured furniture inventories using the last-in,

first

-out (“LIFO”) method because we believe this methodology provides better matching of revenue and expenses. The cost of imported inventories and Lane Venture product inventories are determined on a

first

-in,

first

-out (“FIFO”) basis. Inventories accounted for under the LIFO method represented

52%

and

54%

of total inventory before reserves at

November 24, 2018

and

November 25, 2017,

respectively. We estimate inventory reserves for excess quantities and obsolete items based on specific identification and historical write-offs, taking into account future demand and market conditions. If actual demand or market conditions in the future are less favorable than those estimated, additional inventory write-downs

may

be required.

Property and Equipment

Property and equipment is comprised of all land, buildings and leasehold improvements and machinery and equipment used in the manufacturing and warehousing of furniture, our Company-owned retail operations, our logistical services operations, and corporate administration. This property and equipment is stated at cost less accumulated depreciation. Depreciation is computed over the estimated useful lives of the respective assets utilizing the straight-line method. Buildings and improvements are generally depreciated over a period of

years. Machinery and equipment are generally depreciated over a period of

years. Leasehold improvements are amortized based on the underlying lease term, or the asset’s estimated useful life, whichever is shorter.

Retail Real Estate

Retail real estate is comprised of owned and leased properties which have in the past been utilized by licensee operated BHF stores and are now leased or subleased to non-licensee tenants. The net book value of our retail real estate at

November 24, 2018

and

November 25, 2017

was

$1,655

and

$1,758,

respectively, and is included in other long-term assets in our consolidated balance sheets. This real estate is stated at cost less accumulated depreciation and is depreciated over the useful lives of the respective assets utilizing the straight line method. Buildings and improvements are generally depreciated over a period of

years. Leasehold improvements are amortized based on the underlying lease term, or the asset’s estimated useful life, whichever is shorter. Depreciation expense was

$103,

$127,

and

$152

in fiscal

2018,

2017,

and

2016,

respectively, and is included in other loss, net, in our consolidated statements of income.

The net book value of our retail real estate at

November 24, 2018

consisted of

one

property located near Charleston, South Carolina which is fully occupied by a tenant under a long term lease. We also own a building in Chesterfield County, Virginia that was formerly leased to a licensee for the operation of a BHF store. The building is subject to a ground lease that expires in

2020,

but has additional renewal options. Since

2012,

we have leased the building to another party who is, as of recently, paying less than the full amount of the lease obligation, resulting in rental income insufficient to cover our ground lease obligation. Efforts to sell our interest in the building have been unsuccessful so far. We have also concluded that absent a significant cash investment in the building the likelihood of locating another tenant for the building at a rent that would provide positive cash flow in excess of the ground lease expense is remote. In addition, we obtained an appraisal during the

second

quarter of fiscal

2017

which indicated that the value of the building had significantly decreased and was now minimal. Given these circumstances, we concluded in the

second

quarter of fiscal

2017

that we are unlikely to renew the ground lease in

2020

and would therefore likely vacate the property at that time. Consequently, we recorded a non-cash impairment charge of

$1,084

during fiscal

2017

to write off the value of the building.

Goodwill

Goodwill represents the excess of the fair value of consideration given over the fair value of the tangible assets and liabilities and identifiable intangible assets of businesses acquired. The acquisition of assets and liabilities and the resulting goodwill is allocated to the respective reporting unit: Wood, Upholstery, Retail or Logistical Services. We review goodwill at the reporting unit level annually for impairment or more frequently if events or circumstances indicate that assets might be impaired.

In accordance with ASC Topic

350,

Intangibles – Goodwill & Other

the goodwill impairment test consists of a

two

-step process, if necessary. However, we

first

assess qualitative factors to determine whether it is more likely than

not

that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the

two

-step goodwill impairment test described in ASC Topic

350.

The more likely than

not

threshold is defined as having a likelihood of more than

percent. If, after assessing the totality of events or circumstances, we determine that it is

not

more likely than

not

that the fair value of a reporting unit is less than its carrying amount, then performing the

two

-step impairment test is unnecessary and our goodwill is considered to be unimpaired. However, if based on our qualitative assessment we conclude that it is more likely than

not

that the fair value of a reporting unit is less than its carrying amount, we will proceed with performing the

two

-step process. Based on our qualitative assessment as described above, we have concluded that our goodwill is

not

impaired as of

November 24, 2018.

The

first

step compares the carrying value of each reporting unit that has goodwill with the estimated fair value of the respective reporting unit. Should the carrying value of a reporting unit be in excess of the estimated fair value of that reporting unit, the

second

step is performed whereby we must calculate the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit. This

second

step represents a hypothetical application of the acquisition method of accounting as if we had acquired the reporting unit on that date. Our impairment methodology uses a discounted cash flow analysis requiring certain assumptions and estimates to be made regarding future profitability of the reporting unit and industry economic factors. While we believe such assumptions and estimates are reasonable, the actual results

may

differ materially from the projected amounts.

Other Intangible Assets

Intangible assets acquired in a business combination and determined to have an indefinite useful life are

not

amortized but are tested for impairment annually or between annual tests when an impairment indicator exists. The recoverability of indefinite-lived intangible assets is assessed by comparison of the carrying value of the asset to its estimated fair value. If we determine that the carrying value of the asset exceeds its estimated fair value, an impairment loss equal to the excess would be recorded.

Definite-lived intangible assets are amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts

may

not

be recoverable. We estimate the useful lives of our intangible assets and ratably amortize the value over the estimated useful lives of those assets. If the estimates of the useful lives should change, we will amortize the remaining book value over the remaining useful lives or, if an asset is deemed to be impaired, a write-down of the value of the asset

may

be required at such time.

Impairment of Long Lived Assets

We periodically evaluate whether events or circumstances have occurred that indicate long-lived assets

may

not

be recoverable or that the remaining useful life

may

warrant revision. When such events or circumstances are present, we assess the recoverability of long-lived assets by determining whether the carrying value will be recovered through the expected undiscounted future cash flows resulting from the use and eventual disposition of the asset. In the event the sum of the expected undiscounted future cash flows is less than the carrying value of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. Fair value is determined based on discounted cash flows or appraised values depending on the nature of the assets. The long-term nature of these assets requires the estimation of cash inflows and outflows several years into the future.

When analyzing our real estate properties for potential impairment, we consider such qualitative factors as our experience in leasing and selling real estate properties as well as specific site and local market characteristics. Upon the closure of a Bassett Home Furnishings store, we generally write off all tenant improvements which are only suitable for use in such a store.

Income Taxes

We account for income taxes under the liability method which requires that we recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. See Note

14.

We recognize the tax benefit from an uncertain tax position only if it is more likely than

not

that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Despite our belief that our liability for unrecognized tax benefits is adequate, it is often difficult to predict the final outcome or the timing of the resolution of any particular tax matters. We

may

adjust these liabilities as relevant circumstances evolve, such as guidance from the relevant tax authority or our tax advisors, or resolution of issues in the courts. These adjustments are recognized as a component of income tax expense in the period in which they are identified.

We evaluate our deferred income tax assets to determine if valuation allowances are required or should be adjusted. A valuation allowance is established against our deferred tax assets based on consideration of all available evidence, both positive and negative, using a “more likely than

not”

standard. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with tax attributes expiring unused and tax planning alternatives. In making such judgments, significant weight is given to evidence that can be objectively verified. See Note

14.

New Store Pre-Opening Costs

Income from operations for fiscal

2018,

2017

and

2016

includes new store pre-opening costs of

$2,081,

$2,413

and

$1,148,

respectively. Such costs consist of expenses incurred at the new store location during the period prior to its opening and include, among other things, facility occupancy costs such as rent and utilities and local store personnel costs related to pre-opening activities including training. New store pre-opening costs do

not

include costs which are capitalized in accordance with our property and equipment capitalization policies, such as leasehold improvements and store fixtures and equipment. Such capitalized costs associated with new stores are depreciated commencing with the opening of the store. There are

pre-opening costs associated with stores acquired from licensees, as such locations were already in operation at the time of their acquisition.

Shipping and Handling Costs

Costs incurred to deliver wholesale merchandise to customers are recorded in selling, general and administrative expense and totaled

$17,511,

$18,514,

and

$18,451

for fiscal

2018,

2017

and

2016,

respectively. Costs incurred to deliver retail merchandise to customers, including the cost of operating regional distribution warehouses, are also recorded in selling, general and administrative expense and totaled

$19,107,

$18,424,

and

$18,094

for fiscal

2018,

2017

and

2016,

respectively.

Advertising

Costs incurred for producing and distributing advertising and advertising materials are expensed when incurred and are included in selling, general and administrative expenses. Advertising costs totaled

$20,922,

$18,834,

and

$16,688

in fiscal

2018,

2017,

and

2016,

respectively.

Insurance Reserves

We have self-funded insurance programs in place to cover workers’ compensation and health insurance. These insurance programs are subject to various stop-loss limitations. We accrue estimated losses using historical loss experience. Although we believe that the insurance reserves are adequate, the reserve estimates are based on historical experience, which

may

not

be indicative of current and future losses. We adjust insurance reserves, as needed, in the event that future loss experience differs from historical loss patterns.

Supplemental Cash Flow Information

There were

material non-cash investing or financing activities during fiscal

2018,

2017

2016.

Recent Accounting Pronouncements

Recently Adopted Pronouncements

July 2015,

the FASB issued Accounting Standards Update

No.

2015

11,

Inventory (Topic

330

Simplifying the Measurement of Inventory

. ASU

2015

requires that inventory within the scope of this Update be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments in this Update do

not

apply to inventory that is measured using last-in,

first

-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using

first

-in,

first

-out (FIFO) or average cost. For all entities, the guidance is effective for annual periods, and interim periods within those annual periods, beginning after

December 15, 2016.

Early adoption is permitted. Therefore the amendments in ASU

2015

became effective for us as of the beginning of our

2018

fiscal year. The adoption of this guidance did

not

have a material impact upon our financial condition or results of operations.

February 2018,

the FASB issued Accounting Standards Update

No.

2018

02,

Income Statement—Reporting Comprehensive Income (Topic

220

): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU

2018

was issued to provide narrow-scope guidance for entities that are required to apply the provisions of Topic

220,

Income Statement—Reporting Comprehensive Income, and have items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments in ASU

2018

allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is

not

affected. The amendments in ASU

2018

are effective for all entities for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, (

) for public business entities for reporting periods for which financial statements have

not

yet been issued and (

) for all other entities for reporting periods for which financial statements have

not

yet been made available for issuance. Because the Act has had a significant impact upon the tax effects of pension costs included in our accumulated other comprehensive loss, we have adopted the guidance in ASU

2018

effective as of the beginning of the

first

quarter of fiscal

2018,

resulting in the reclassification of

$545

of tax benefits from accumulated other comprehensive loss to retained earnings (see Note

Recent Pronouncements

Not

Yet Adopted

May 2014,

the FASB issued Accounting Standards Update

No.

2014

(ASU

2014

), which creates ASC Topic

606,

Revenue from Contracts with Customers, and supersedes the revenue recognition requirements in Topic

605,

Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, ASU

2014

supersedes the cost guidance in Subtopic

605

35,

Revenue Recognition—Construction-Type and Production-Type Contracts, and creates new Subtopic

340

40,

Other Assets and Deferred Costs—Contracts with Customers. In summary, the core principle of Topic

606

is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Companies are allowed to select between

two

transition methods: (

) a full retrospective transition method with the application of the new guidance to each prior reporting period presented, or (

) a retrospective transition method that recognizes the cumulative effect on prior periods at the date of adoption together with additional footnote disclosures. In addition, during

2016

the FASB has issued ASU

2016

08,

ASU

2016

and ASU

2016

12,

all of which clarify certain implementation guidance within ASU

2014

09,

and ASU

2016

11,

which rescinds certain SEC guidance within the ASC effective upon an entity’s adoption of ASU

2014

09.

The amendments in ASU

2014

are effective for annual reporting periods beginning after

December 15, 2017,

including interim periods within that reporting period, and early application is

not

permitted. Therefore the amendments in ASU

2014

will become effective for us as of the beginning of our

2019

fiscal year. In order to evaluate the impact that the adoption of ASU

2014

will have on our consolidated financial statements, we have conducted a comprehensive review of the significant revenue streams across our wholesale, retail and logistical services reportable segments. The focus of this review included, among other things, the identification of the significant contracts and other arrangements we have with our customers to identify significant performance obligations, factors affecting the determination of transaction price, such as variable consideration, and factors affecting the classification of receipts as revenue, such as principal versus agent considerations. Our findings from the review were then analyzed based on the

five

-step model described in the new standard. We are currently finalizing our assessment of the impact that adoption will have on our consolidated financial statements. While we have

not

yet made a final determination as to the impact on our financial position or results of operations, we do anticipate incorporating additional disclosures, primarily related to disaggregation of revenue. We are also in the process of implementing the necessary changes to our accounting policies, procedures and controls with respect to these contracts and arrangements as required by the adoption of ASU

2014

09.

We will adopt this standard as of the beginning of our

2019

fiscal year using the modified retrospective method of adoption. We do

not

expect the adoption of this standard to have a material impact on our financial position or results of operations.

January 2016,

the FASB issued Accounting Standards Update

No.

2016

01,

Financial Instruments - Overall (Subtopic

825

): Recognition and Measurement of Financial Assets and Financial Liabilities

. ASU

2016

requires that equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are to be measured at fair value with changes in fair value recognized in net income. However, an entity

may

choose to measure equity investments that do

not

have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Furthermore, equity investments without readily determinable fair values are to be assessed for impairment using a quantitative approach. The amendments in ASU

2016

should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, with other amendments related specifically to equity securities without readily determinable fair values applied prospectively. The amendments in ASU

2016

will become effective for us as of the beginning of our

2019

fiscal year. The adoption of this guidance is

not

expected to have a material impact upon our financial condition or results of operations.

February 2016,

the FASB issued Accounting Standards Update

No.

2016

02,

Leases (Topic

842

). The guidance in ASU

2016

(as subsequently amended by ASU

2018

01,

ASU

2018

10,

ASU

2018

and ASU

2018

) requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of

months or less, a lessee is permitted to make an accounting policy election by class of underlying asset

not

to recognize lease assets and lease liabilities. As with previous guidance, there continues to be a differentiation between finance leases and operating leases, however this distinction now primarily relates to differences in the manner of expense recognition over time and in the classification of lease payments in the statement of cash flows. Lease assets and liabilities arising from both finance and operating leases will be recognized in the statement of financial position. ASU

2016

leaves the accounting for leases by lessors largely unchanged from previous GAAP. The transitional guidance for adopting the requirements of ASU

2016

calls for a modified retrospective approach that includes a number of optional practical expedients that entities

may

elect to apply. In addition, ASU

2018

provides for an additional (and optional) transition method by which entities

may

elect to initially apply the transition requirements in Topic

842

at that Topic’s effective date with the effects of initially applying Topic

842

recognized as a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption and without retrospective application to any comparative prior periods presented. Also, ASU

2018

provides certain narrow-scope improvements to Topic

842

as it relates to lessors. The guidance in ASU

2016

will become effective for us as of the beginning of our

2020

fiscal year. We are currently evaluating the impact that the adoption of ASU

2016

will have on our consolidated financial statements, which we expect will have a material effect on our statement of financial position (refer to Note

for information regarding our leases currently classified as operating leases under ASC Topic

840

). We currently anticipate that we will adopt the guidance of ASU

2016

as of the beginning of our

2020

fiscal year using the optional transition method as provided by ASU

2018

11.

August 2016,

the FASB issued Accounting Standards Update

No.

2016

15,

Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments

. ASU

2016

addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows with the objective of reducing existing diversity in practice with respect to these items. Among the types of cash flows addressed are payments for costs related to debt prepayments or extinguishments, payments representing accreted interest on discounted debt, payments of contingent consideration after a business combination, proceeds from insurance claims and company-owned life insurance, and distributions from equity method investees, among others. The amendments in ASU

2016

are to be adopted retrospectively and will become effective for as at the beginning of our

2019

fiscal year. Early adoption, including adoption in an interim period, is permitted. The adoption of this guidance is

not

expected to have a material impact upon our presentation of cash flows.

January 2017,

the FASB issued Accounting Standards Update

No.

2017

01,

Business Combinations (Topic

805

): Clarifying the Definition of a Business

. ASU

2017

provides a screen to determine when an integrated set of assets and activities (collectively referred to as a “set”) does

not

constitute a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is

not

a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is

not

met, the amendments in ASU

2017

(

) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (

) remove the evaluation of whether a market participant could replace missing elements. The amendments in ASU

2017

shall apply prospectively and will become effective for as at the beginning of our

2019

fiscal year. The adoption of this guidance is

not

expected to have a material impact upon our financial condition or results of operations.

January 2017,

the FASB issued Accounting Standards Update

No.

2017

04,

Intangibles – Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment

. ASU

2017

eliminates Step

from the goodwill impairment test. Under Step

an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in ASU

2017

04,

an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should

not

exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments in ASU

2017

will become effective for us as of the beginning of our

2021

fiscal year. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017.

The adoption of this guidance is

not

expected to have a material impact upon our financial condition or results of operations.

May 2017,

the FASB issued Accounting Standards Update

No.

2017

09,

Compensation – Stock Compensation (Topic

718

): Scope of Modification Accounting

. ASU

2017

was issued to provide clarity and reduce both (

) diversity in practice and (

) cost and complexity when applying the guidance in Topic

718,

Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic

718.

Essentially, an entity will

not

have to account for the effects of a modification if: (

) The fair value of the modified award is the same immediately before and after the modification; (

) the vesting conditions of the modified award are the same immediately before and after the modification; and (

) the classification of the modified award as either an equity instrument or liability instrument is the same immediately before and after the modification. The amendments in ASU

2017

will become effective for us as of the beginning of our

2019

fiscal year. Early adoption is permitted, including adoption in any interim period. The adoption of this guidance is

not

expected to have a material impact upon our financial condition or results of operations.

August 2018,

the FASB issued Accounting Standards Update

No.

2018

15,

Accounting Standards Update

No.

2018

– Intangibles - Goodwill and Other - Internal-Use Software (Subtopic

350

): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. The amendments in ASU

2018

align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is

not

affected by the amendments in ASU

2018

15.

The amendments in ASU

2018

will become effective for us as of the beginning of our

2021

fiscal year. Early adoption is permitted, including adoption in any interim period. We are currently evaluating the impact that this guidance will have upon our financial position and results of operations, if any.

Reclassifications

Certain prior year amounts in the consolidated financial statements have been reclassified to conform to current year presentation with

effect on previously reported net income, stockholders' equity or cash flows.